Pulse prices tumble, under weight of soaring EU, Russian output

It isn’t just in the wheat market that Russia is making itself unpopular with other exporting countries, after producing a bumper harvest – and pricing it competitively onto the world market.

In pulses too, Russia, and other countries in the region, are through raised output providing headaches for traditional suppliers such as Canada and Australia.

This is particularly true in the market for yellow, or field, peas of which global production has “jumped sharply”, but not in the typical exporting countries.

“Europe is where the increases have come,” said trading house Nidera Australia.

“Black Sea countries along with several new players in Eastern and Western Europe, have sharply increased production.”

Record harvest

Russia’s 2017 output of pulses overall soared 27-30% year on year, according to UkrAgroConsult.

Meanwhile, European Union production this year of field peas soared by more than 500,000 tonnes to 2.78m tonnes, a figure “almost 70% higher than the five-year average”, according to the European Commission.

The increase - driven by a 90,000-hectare rise to 1.01m hectares in sowings, 68% above the average pace – has put “record” output of 5.18m tonnes on the cards for so-called “protein crops” overall, which the commission defines as field peas, broad beans and lupins.

‘Driven prices sharply lower’

The, negative, impact on prices of the extra output in the Europe-Black Sea region has been exacerbated by a logistical shortfall.

“Many of these countries have limited storage infrastructure so this product has all hit the market since July,” said Nidera Australia, which is part of China’s Cofco group.

“This has driven yellow pea prices sharply lower.”

Inventory surge

Furthermore, demand from the key Indian market is being undermined by a recovery in pulses production there too, after successive seasons of drought-depressed harvests which had boosted imports, and prices in major exporting countries.

Indeed, India has placed a 50% duty on imports of yellow peas.

Canada forecasts its exports of field peas plunging by nearly 40% this season, to 2.40m tonnes, “due to lower demand from India”.

Thanks to the export slump, “carryout stocks are to increase sharply”, trebling to 950,000 tonnes over 2017-18, and spurring a drop of up to 18% in farmgate prices.

Peas vs chickpeas

The weakness in pea prices, and abundance in supplies, is undermining values of other pulses too, as consumers switch crops.

“With yellow pea prices less than half the value of desi chickpeas, there’s always going to be some substitution and changes in consumer habits has surprised the market,” Nidera said.

“In India, the change has been particularly significant with many mills choosing to switch to yellow pea dal and besan production completely.”

December chana (chickpea) futures on India’s Ncdex exchange tumbled 3.0% to 3,887 rupees on Thursday, down nearly 40% since the end of August on a spot contract basis.

“In countries like Bangladesh, the increase in consumption of yellow pea products are at the expense of chickpeas.”

Double whammy

For Australian farmers, the woes of low prices - reported by AgVantage at Aus$700-720 a tonne for chickpeas, values of which approached Aus$1,300 a tonne last year – have been exacerbated by a drought-damaged harvest too.

The country’s 2017-18 chickpea output is estimated by Abares, the official commodities bureau, tumbling in volume terms by 37% to 1.05m tonnes – despite a 21% rise to 1.30m hectares in sowings.

The crop is deemed of being of weak quality too.

“This year, our crops are mediocre at best and full of quality issues,” Nidera said, although underlining that the “long-term future remains bright” for Australian pulses.

“India is only one crop failure away” from requiring “substantial imports once again”.

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